Commission hails approval of the adoption of
the euro in Cyprus and Malta

The European Commission welcomes the final and
formal decision by the Ecofin Council today allowing Cyprus and Malta to adopt
the euro as from 1 January 2008. On a proposal by the Commission, the Council
also fixed at 0.585274 the rate at which the Cypriot pound will be converted
into euro. The equivalent rate for the Maltese lira is 0.429300 for one euro. In
the coming 5½ months, both countries will have to complete and finalise
their crucial practical preparations to ensure that the changeover to the euro
takes place smoothly, as was the case in Slovenia this year.

"I am happy that Cyprus and Malta will adopt the euro bringing to 15
countries and nearly 320 million the number of people who share the currency
that has the vocation to be, one day, the sole currency of the European Union",
said Joaquín Almunia, European Commissioner for Economic and Monetary
Affairs. "Thanks to economic and monetary union, the euro area has now
enjoyed an unprecedented period of price stability and low interest rates. But
being part of a monetary union also implies an added responsibility vis à
vis the other members; a responsibility to run sound public finances and to
coordinate economic policies for the benefit of more growth and better jobs for
all."

Today European Union finance ministers agreed the formal texts necessary for
Cyprus and Malta to adopt the euro on the 1st of January 2008. Based
on a Commission proposal, they also decided that the Cyprus pound will be
replaced by the euro at the rate of 0.585274 to the euro, and that the Maltese
lira will be replaced by the euro at 0.429300 to the euro.

Need to pursue stability-oriented policies

Inflation and interest rates have never been so low, in so many EU countries
and for so long than since the introduction of the euro in 1999. Euro area
average inflation has remained well-anchored around 2% since the mid 90s and
mortgage rates have converged from double-digit levels in some countries in the
early 90s to around 5%.

Cyprus and Malta will enjoy those same benefits provided that they continue
to pursue sound public finances, stable macroeconomic policies and structural
policies. This applies primarily to budgetary, wage and further reforms in the
areas of pensions and health care in order to improve the long-term
sustainability of their public finances as well as structural reforms to improve
the functioning of product and labour markets.

Final practical preparations

Cyprus and Malta are also well advised to devote great attention to the
practical preparations that need to be carried out in the next 5½ months to
ensure a smooth changeover. Production of the coins will start shortly after
today's ECOFIN decision at the Mint of Finland, for the Cyprus coins, and the
French Mint (Maltese coins) as a result of public tenders. Euro coins bear a
common and national side. To see the side of the coins of Cyprus and Malta go
to:

Next week the Commission is expected to update the state of state of the
practical preparations for the euro in the EU countries that have not yet
adopted it and do not have a legal opt-out. The Fifth report on the state of
practical preparations for the enlargement of the euro area will focus on Cyprus
and Malta given the proximity of the changeover date for the two countries.

The Commission on 16 May 2007 concluded that Cyprus and Malta met the
convergence criteria to qualify for the introduction of the euro.

For the Convergence Reports see press releases IP/07/674
(on Cyprus) and IP/07/673
(Malta) as well as the full texts on: